News Category:
M&A valuations

The business judgment rule has featured prominently in a number of recent breach of fiduciary duty cases in front of the Delaware Court of Chancery. Under the rule, the court must not interfere in a transaction if a majority of the minority shareholders approved the deal and the vote was “uncoerced and fully informed.” Read more >>

A press release from law consulting firm Altman Weil provides multiple takeaways for business valuation professionals, all of which indicate that law firm mergers and acquisitions are poised to continue in historic numbers. The industry trend is toward acquisition as the favored method for established firms to find new business. Read more >>

There were 1,536 healthcare M&A transactions in 2016, up 1% from 2015, but overall spending dropped to $255.7 billion from $400.3 billion in 2015, according to data from Irving Levin Associates Inc. Read more >>

It decided to give no weight to the final merger price—$13.75 per share, and a special $0.13 dividend issued to all shareholders—but rely exclusively on its own post-transaction DCF analysis to determine the fair value of the company. In so doing, the court deviated from a number of Chancery decisions—several issued in 2015—that found the deal price was the most reliable indicator of the company’s fair value. Read more >>

A number of M&A records were broken in 2015, including net M&A announcements (12,012), $100 million-plus deals (1,197), cash payments (78%), average P/E offered (29.6), and more, according to the 2016 Mergerstat Review. Read more >>

Asked to probe the value of the disclosures and by extension the fairness of the settlement to the absent class members, the Chancellor used the occasion to detail the problems related to disclosure settlements. He noted the Chancery’s historical practice of approving such settlements, even though they frequently were of marginal value to the plaintiffs. He considered this past attitude of the court one of the causes for the explosion of deal litigation “beyond the realm of reason." Read more >>

In terms of valuation methodology, the agreement provided that “there shall be no minority or non-marketability discount applied.” Also, “fair market value” meant an arm’s length sale to an unrelated third party. And, for purposes of calculating the “total equity value,” the value of the assets would be subject to an EBITDA collar to ensure that the value of the assets was at least 6.5 x but no more than 7.5 x the company’s “EBITDA less Maintenance Capex” for year-end 2013. The resulting number was to be reduced by the company’s obligations and liabilities. Most important, the parties agreed to be bound by the appraiser's calculation of the price of the put units. There was no provision for judicial or any other form of review of the appraiser's valuation. Read more >>